Why India Should Do Away with Spectrum Caps Completely?

The Telecom Commission’s decision to relax spectrum holding caps from the existing levels of 25% overall across all bands and 50% within same band to the levels recommended by TRAI , which is 35% across bands and 50% in the combined holding in sub-1GHz bands, is a welcome and laudable move.

It is a step forward to the much-awaited consolidation in the market with the immediate beneficiaries being all the major telecom service providers. For Vodafone and Idea, the relaxation to 50% would help them in various circles. Reliance Jio (RJio) can buy spectrum from Reliance Communication (RCom) and Airtel can also look to buy out residual spectrum from RCom. In addition, RCom would benefit as it has the valuable 800 MHZ spectrum which can fetch good value as it trims its debts, say industry analysts.

But keeping in mind the fact that India’s data consumption is growing rapidly, touching 150 crore gigabytes per month, and surpassing that of the US and China, it is important that we abolish the spectrum caps completely, paving a smoother ride for 5G as well.

During the early days of establishment of the telecom sector, the spectrum cap limits were introduced in the US to ensure competition in the market. However, with the changing times, in various countries spectrum caps were either removed or increased.

According to a paper –Mobile Broadband, Competition and Spectrum Caps—by GSMA, “Economic, demand, and technical factors are driving operators to seek substantially more spectrum to improve their efficiencies and deploy better and new broadband services to customers, which will be inhibited by the continuation of tight spectrum caps.”

The paper also highlighted that the “ability of innovative operators to deploy new valuable services may be impaired if they are subject to some current rigid spectrum caps that will not allow them to acquire sufficient additional spectrum to exploit the maximum efficiencies of new broadband wireless technologies and offer a wide portfolio of broadband services to their customers.”

Echoing similar views, T.V. Ramachandran, President, Broadband India Forum (BIF), says: “In this age of exploding data-based services and humungous data consumption, it is axiomatic and fundamental that enormous spectrum availability is essential to be able to meet customer requirements of hi-quality service in the exponentially-rising demand for video and other data-rich services.”

“Having taken a great step forward in relaxing spectrum caps, the TRAI and the Telecom Commission should next plan to abolish spectrum caps totally in the near future in order to fully exploit the potential of 5G, he added.

Room for QoS Improvement

The quality of services also improves with more spectrum holding and lowers the cost. According to Girish Trivedi, Co-founder & Director, Monk Consulting, “Better spectrum with players will encourage data services at competitive pricing and also the doubt that prices would move northward is being addressed now. Stable pricing will encourage players to provide better differentiations. It is overall a positive move for QoS.”

However, this will impact smaller players as their competitiveness can be impacted if they don’t find the right niche and services. At the same time, as we brace for 4-5 players in the telecom sector in the next 18 months, this can be a good opportunity for MVNOs who can come and assist these players address needs of various niche segments and differentiate from services and product standpoint, he added.

As India marches ahead for 5G and IoT, it is imperative that we come out of the conventional mindset on spectrum holdings and, like other progressive regimes have done, facilitate higher spectrum holding per operator.